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Copper rally prompts Taseko Mines upgrade

The Andina copper mine, 80 km northeast of Santiago, Chile. China's State Reserve Bureau made a strategic decision last year to stockpile copper, convinced that the metal was caught up in a "super-cycle" of commodity price escalation.

Ivan Alvarado/Ivan Alvarado/Reuters

Copper has been on a tear since early summer, jumping 24 per cent in the third quarter alone, and several analysts are betting its bullish days are far from over. Not only will the red metal benefit from greater demand as global economies recover, but the supply pipeline is looking limited. The International Copper Study Group (ICSG) recently said it expects the global market for refined copper to swing into a 400,000-tonne deficit for 2011.

Analysts are upgrading both their forecasts for the copper price and some producers. Today, Jennings Capital Inc. analyst Peter Campbell raised his 2011 copper price forecast to $3.50 (U.S.) per pound from $2.98 while raising his outlook for Taseko Mines Ltd. .

"Our view of the copper market is that there is no significant new supply of copper ready to meet the demand of increased economic activity projected by the ICSG," Mr. Campbell said in a research note. "In fact, many of the world's largest copper producers face declining production due to lower grades and aging operations, exacerbating an already tight supply situation."

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Taseko currently produces copper and molybdenum from its Gibraltar Mine in British Columbia and plans to develop the Prosperity copper-gold project in the same province. Mr. Campbell said the miner is now beginning to realize production increases from mill improvements it has been working on since 2006, and federal approval for the its Prosperity project should come any day.

Upside: Mr. Campbell hiked his 12-month target price by $2 to $9 a share and continues to recommend the stock as a buy.

Canyon Services Group Inc. , which provides fracturing and chemical stimulation services to oil and natural gas companies, will benefit from strong fundamentals in the Canadian pressure pumping market and its expanding presence in the deep basin areas of the Western Canadian Sedimentary Basin, said RBC Dominion Securities Inc. analyst Dan MacDonald.

Upside: Mr. MacDonald raised his price target by $3 to $10.00

DragonWave Inc. , a provider of high-capacity packet microwave solutions that drive next-generation IP networks, has acquired mobile network infrastructure firm Axerra of Israel for $9.5-million. Chris Umiastowski, analyst with TD Newcrest, said the acquisition "makes excellent strategic sense and carried out at an attractive price for DragonWave investors."

Upside: Mr. Umiastowski upgraded his 12-month price target by $1 to $11.00 a share, and maintained his buy recommendation.

Grande Cache Coal Corp. has decreased its sales guidance range for fiscal 2011 to 1.7 million to 1.9 million tonnes, from 2.0 million to 2.2 million, noted Gary Lampard, analyst with Canaccord Genuity.

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Downside: Mr. Lampard cut his target price to $8.40 from $9.50 but maintained his buy recommendation.

Keegan Resources Inc. has released drill results at its Esasse project in West Africa that continue to show high-grade gold mineralization, said Canaccord Genuity analyst Nicholas Campbell.

Upside: Canaccord Genuity, which recently hiked its 2011 gold price forecast by $200 (U.S.) an ounce to $1,400, raised its target on the stock to $12.50 from $11.00.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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